The Federal Insurance and Mitigation Administration (FIMA) is a component of the Department of Homeland Security (DHS), Federal Emergency Management Agency (FEMA), which operates the National Flood Insurance Program (NFIP). On March 21, 2014, President Obama signed the Homeowner Flood Insurance Affordability Act (HFIAA) of 2014 into law. This law repeals and modifies certain provisions of the 2012 Biggert-Waters Flood Insurance Reform Act, and makes additional program changes to other aspects of the program not covered by that Act. One modification regards a study being conducted by the National Research Council of the National Academy of Sciences. HFIAA requires the submission of the Affordability Study by the FEMA Administrator in 18 months from enactment of the Act.

FEMA has asked the NAS to provide two reports as part of the NFIP Affordability Study.

The first report, due in February 2015, will discuss the underlying definitions and methods for an affordability framework and describe the affordability concept and applications, and program policy options.

The second report, due in September 2015, will propose alternative approaches for a national evaluation of affordability program policy options, based in part on lessons gleaned from a proof-of-concept pilot study to be guided by the NRC committee.
An ad hoc committee under the auspices of the National Research Council will prepare both reports according to the following statements of task:
First Report

The first report will discuss the underlying definitions for an affordability framework and describe the affordability concept and applications and program policy options.

The first report shall discuss:

• Methods for establishing an affordability framework, including means-tested vouchers, for the National Flood Insurance Program;

• Appropriate and necessary assumptions and definitions, including “affordability” and “full risk-based premiums.”

This report shall be delivered by February 28, 2015.

Second Report
The second report will propose alternative approaches for a national evaluation of affordability program policy options. The second report will include lessons for the design of a national study from a proof-of-concept pilot study.

The second report shall discuss:

• Data issues such as needs, availability, quantity, and quality;

• Appropriate analytical methods and related considerations, including models, computing software, and geographic areas to be analyzed;

• A proof-of-concept pilot analysis will be subcontracted as part of the study. This analysis will apply different methods for conducting a flood insurance affordability analysis for a state (North Carolina) in which data on elevations of structures and hydrologic flood hazards are readily available. This analysis will inform the committee’s deliberations and findings regarding the possibilities for a national-level flood insurance affordability study, for which these data on elevations and flood hazards are less readily available;

• National implications from the proof-of-concept pilot results including, but not limited to, possible impacts on participation rates (the analytical work for the proof-of-concept pilot may be carried out by the NRC directly or using sub-contractors as necessary).

This report shall be delivered by September 20, 2015.